"It's the two–year anniversary of the first fire. There have been two subsequent fires."

The Kozy Bar and Apartments, located on the corner of East First Street and Second Avenue East in Duluth has a long history.

Before the fire, more than 50 people were living in the low–cost apartments.

"And those fires along with the water damage, and the damage that the firemen created in trying to put out the fire, really put the building in jeopardy."

Conlan is partnering with Kozy owner Eric Ringsred in an effort to revamp the property.

The building suffered major structural damage and has been condemned.

"We lost a lot."

The first problem was finding the Kozy residents a safe place to live.

"There's a lot of pressure to try to provide low income housing for those who need it most...you know, there are homeless people."

But housing options such as the subsidized apartments at King Manor, The Seaway Hotel, and the limited emergency shelter space at CHUM, are not enough supply to meet the demand.

"From 2008 up until the Kozy fire, the Gardner shutdown, the Kozy fire happened, the Carter Hotel closed. So we lost about 100 rooms or apartments that were available for single people or couples."

Pederson says some of the displaced from the Kozy did move into the Seaway Hotel.

In June, there were more than 80 people living there.

But then the June floods worsened problems at the already troubled Seaway Hotel leaving the apartment building in jeopardy of condemnation.

"We had the good luck of having the Seaway, you know, maintaining the Seaway. And that would have been a disaster if we would have lost the Seaway."

The condemnation proceedings were put on hold after the building owner promised to make extensive improvements. But that doesn't solve the housing issue entirely.

"Well the vacancy rate for housing for very low income people is tight—affordable housing units are very tight."

"Have more need than there is—and more demand—than we have available housing right now."

The Housing and Redevelopment Authority is working with other groups to solve the problem. Director Rick Ball says the soon to be built Hillside Apartments will provide 44 low income housing units, along with six emergency shelter units.

Plus the Firehouse Flats, on Fourth Street will provide more low income workforce housing.

Both expect to be leasing units by next year.

"We have some additional phases of development that we are working on in the Harbor Highlands area that would include some affordable home ownership development."

Ball says the board of trade building and has also developed a proposal for low income housing.

Property owner Eric Ringsred has formed a partnership to invest nearly eight million dollars in hopes of bringing the Kozy back to its original beauty.

"And create probably 34 units of affordable housing in the building."

Conlan and Ringsred have submitted historical and rehabilitation plan applications with approval expected by November of 2013.